In his first weeks in office, President Trump has taken steps to undo or alter major components of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). These include delaying implementation of the “Fiduciary Rule,” which regulates the relationship between investors and their financial advisors, directing the Treasury Secretary to review the Dodd-Frank Act in its entirety, and signing a resolution passed by Congress that repeals a Dodd-Frank regulation on disclosures of overseas activity by energy companies. Additionally, many Republicans are hoping Trump soon moves to remove the current head of the Consumer Financial Protection Bureau, Obama appointee Richard Cordray. Still, many in the financial services industry had hoped that a Republican in the White House would bring more immediate regulatory reforms. Now, those observers are conceding a slower pace of changes to Dodd-Frank is more likely. There remains bipartisan support for minor changes to Dodd-Frank, such as easing rules on community banks, but more significant changes to Dodd-Frank will require 60 votes in the Senate, which means at least eight Senate Democrats will need to get on board. Dodd-Frank reforms are also competing against taxes, health care, and immigration for time and attention from party leaders.
Despite this myriad of hurdles to enacting Dodd-Frank reforms, House Financial Services Committee Chairman Rep. Jeb Hensarling (R-TX) will introduce his “Financial Choice Act 2.0,” which would overhaul Dodd-Frank, in the coming weeks. But Hensarling’s work on Dodd-Frank will coincide with his Committee’s other must-pass legislative business such as the National Flood Insurance Program, which will take time away from focusing on Dodd-Frank reforms. Likewise, the Senate Banking Committee is also forced to deal with non-Dodd-Frank tasks such as confirming Trump’s nominees to Administration appointments with responsibilities over the financial sector. There are nine vacant posts at major financial regulators, and several more jobs in the Treasury Department that will require Senate confirmation, to name just a portion of nominees the Committee will need to consider. Once they are in place, those appointees may be able to change regulatory policies more quickly than Congress can alter Dodd-Frank. But it remains to be seen what financial service industry reforms Congress can pass given the already packed legislative calendar, which leaves many in the industry wondering what to expect in the way of Dodd-Frank reforms.